Under the best of circumstances, overseeing the Department of Health and Human Services is an enormous undertaking. With 65,000 employees and a budget of $707.7 billion, it accounts for nearly one-quarter of all federal spending, second only to the Defense Department.

But in the Obama administration the job is taking on a second, perhaps more daunting, responsibility: shepherding health-care reform legislation through Congress.

Unlike his predecessors, Thomas A. Daschle, President-elect Barack Obama’s choice for HHS secretary, will be given an expanded role, leading administration efforts to overhaul the U.S. health system.

“This really creates a new type of secretary,” said Charles N. “Chip” Kahn III, president of the Federation of American Hospitals. In the past, “HHS was more or less a service organization to the White House,” while White House advisers drove policy initiatives.

In broad terms, Obama campaigned on the idea of reducing medical costs, improving quality and eventually achieving universal insurance coverage. He promised to cover every child and to reduce the average family’s medical bill by $2,500 a year. He advocated a greater emphasis on prevention and expanding participation in the government-subsidized Medicare and Medicaid programs.

“There are two aspects to the challenge of pushing for health reform,” said Dan Mendelson, a budget and health adviser in the Clinton administration. “One is to get the right concepts together with what Congress wants to do, and the other is managing the disparate concepts and generous egos.”

A serious restructuring of the health system will require extensive data and analytic capabilities to dissect the proposed changes and the impact they might have, said Karen Davis, president of the Commonwealth Fund, a private, nonpartisan research foundation. “Right now, there’s nothing other than the Office of the Actuary to do back-of-the-envelope estimates,” she said.

With the expectation that Daschle, a former Senate majority leader, will focus heavily on crafting and pushing legislation, there will be an even greater need for a strong No. 2. HHS is a collection of 11 agencies including the Food and Drug Administration, the National Institutes of Health, the Centers for Medicare and Medicaid Services, and the Centers for Disease Control and Prevention.

“He’ll need to have deputies who are well-versed in the agency as a whole and who can manage the ongoing operation of HHS while he leads the health reform discussions,” said Len Nichols, director of health policy at the New America Foundation. One of those will likely be Jeanne Lambrew, a veteran of the Clinton administration and a co-author of Daschle’s book “Critical: What We Can Do About the Health-Care Crisis.”

Lambrew, in a chapter of a book published by the liberal Center for American Progress outlining a proposed agenda for the incoming president, agreed that fixing the health system is a top priority. However, she noted, “these urgent problems overshadow persistent, neglected and potentially deadly infrastructure gaps in the system.”

According to her assessment, the nation’s ability to respond to natural or man-made crises is weak, as evidenced by the poor response to Hurricane Katrina. Chronic illnesses such as diabetes have been given short shrift, and little has been done to prepare for the long-term health needs of an aging population.

The Commonwealth Fund, after interviewing two dozen health leaders, issued its own set of recommendations. It urged the next administration to make a “real focus on what it takes to improve health outcomes,” as opposed to secondary issues related to insurance markets, Davis said. That means tackling childhood obesity, racial disparities and preventable illnesses.

I was agnostic on the matter of Hillary Clinton’s possible appointment as secretary of state–until last night.

If Barack Obama, the president-elect, wanted to pull a Team of Rivals play, that had seemed fine to me. And placing Clinton in Foggy Bottom would remove her from the dicey business of passing health care reform. Would it unite the party? Well, judging from the election results, the party is pretty darn united already. Despite the griping of a few Hillaryites at the Democratic convention, her voters certainly swung behind Obama in the general election (see Pennsylvania), after HRC and WJC campaigned for BHO in the fall. Unless an explicit deal was made between Obama and Hillary Clinton, it did not seem that Obama, after bypassing her for veep, had to appoint her anything for the party’s sake. Still, if Obama and his savvy band of advisers thought that handing her one of the best jobs in the Cabinet would generate political benefits they could use to advance their agenda, I, as a non-fan of Hillary Clinton, was willing to say, okay–for what that was worth.

But then this happened: the presidential transition of no-drama Obama became infected by the never-ending soap opera of the Clintons. And it really is time to turn that program off. There are plenty of policy and political reasons for a progressive not to fancy Hillary. She served on the Wal-Mart board when the mega-firm was fighting unions; she screwed up health care reform for almost a generation; she voted wrong on the Iraq war and then refused to acknowledge she had erred. But, worst of all, as the cliché goes, with the Clintons, it always does seem to be about the Clintons.

So we’ve had a week of will-she-or-won’t-she and what-about-him. Couldn’t this have been handled with a little more grace? Maybe not, since it involves the Clintons.

I don’t know how the Obama camp approached the issue. But before Obama met last week with Hillary to talk about this, his team should have done a pre-vetting of Bill. And then Obama, at this meeting, ought to have said something like this to her:

If you might be interested in the State position, there are a few issues that would come up concerning Bill. Let me run through a few. Would he be willing to release the names of his foundation’s donors, as well as those who contribute to his presidential library? Would he be willing to forego contributions and speaking fees from foreign governments, foreign heads of states, and major foreign companies that would have an interest in US foreign policy decisions? Would he be willing to discuss with my national security adviser his foreign travel plans and his foundation’s projects before they are announced and undertaken–and would he be willing to defer to us if we believe they are not appropriate or helpful at the time? I know that these are big things to ask. But given his global activity and standing, there’s not much choice. And if it’s a deal-breaker, I certainly would understand. But before you and I go down this road, we should make sure there are no major obstacles. Can you talk to him and get back to me in a day or two? And, to be helpful, Rahm has come up with a list….

Hillary’s answer would have to have been either (a) of course, or (b) thank you for considering me, but I don’t believe this would be a good fit. Two days would pass, and then the drama–or at least this part of it–could be over.

Today the news is that Bill will do what he can. AP is reporting:

Former President Bill Clinton has offered several concessions to help Sen. Hillary Rodham Clinton, his wife, become secretary of state, people familiar with President-elect Barack Obama’s transition vetting process said Wednesday.
Clinton has agreed to release the names of several major donors to his charitable foundation and will submit future foundation activities and paid speeches to a strict ethics review, said Democrats knowledgeable about the discussions.
They also said that Clinton would step away from day-to-day responsibility for his foundation while his wife serves and would alert the State Department to his speaking schedule and any new sources of income.

Does that take care of it? Note the use of the word “several.” It’s hard not to see some sticking points arising about what is disclosed and when. The negotiations between the Obama camp and the Clinton team are supposedly proceeding smoothly. But why should there be negotiations? And could it end up with news reports saying Bill Clinton is willing to reveal X, but the Obama side wants him to release X plus Y? That is, more drama. According to AP, “One Clinton adviser noted that former President George H.W. Bush has given paid speeches and participated in international business ventures since his son, George W. Bush, has been president–without stirring public complaints or controversy about a possible conflict of interest.” This does raise the suspicion that the Clintonites might not agree to all the necessary limitations. And don’t they–or at least, this aide–understand there’s something of a difference between their case and that of the Bushes (though it was probably not appropriate for Daddy Bush to engage in that activity).

Bottom-line: if HRC came fuss-free, then maybe there’d be no reason to kick up a fuss about her appointment. Yet that doesn’t seem to be what’s happening.

But there’s another issue to consider, one that has been overshadowed by the drama: if she runs the State Department in a fashion similar to how she managed her campaign, then the country will be in trouble. Her spinners went beyond the boundaries of fair and reasonable spinning. Her team was a snake pit of competitive aides. She did not master the art of refereeing internal disputes. She signed off on strategic blunders. Hers was not a steady hand.

Perhaps that’s the better argument against her. Being secretary of state isn’t just about giving speeches and touring the world as a celebrity, it’s about managing (and now reviving) the creaky and beleaguered foreign policy apparatus of the United States. And Clinton’s résumé is not strong on that front.